Austria updates

Arbitration & ADR

Supreme Court decides on the term 'consumer' with respect to arbitration
  • Austria
  • 16 December 2010

The Supreme Court has established an economic approach to the qualification of shareholders as consumers or entrepreneurs for the purposes of the Consumer Protection Act. This was consolidated by a new decision in which it ruled on whether a shareholder, holding 50% of the shares in a company and acting as managing director thereof, was to be considered a consumer for the purposes of consumer protection law.

Supreme Court strengthens the right to be heard
  • Austria
  • 07 October 2010

In a recent case the Supreme Court was called on to decide whether an arbitral tribunal's disregard of Section 598 of the Code of Civil Procedure constitutes a violation of a party's right to be heard and justifies setting aside an award. According to Section 598, a tribunal is to hold a hearing at an appropriate stage of the proceedings if one party so requests and the parties did not previously agree to exclude the possibility of a hearing.

Court decides on interim measures to ensure enforceability of foreign awards
  • Austria
  • 10 June 2010

Two relevant questions of Austrian law were recently raised in a dispute between an Austrian distributor and a US company. The first question was whether an arbitration agreement remains valid when it provides for arbitration abroad in a case in which Austrian mandatory rules may govern the merits of the dispute; the second was whether interim measures can be granted to ensure the enforcement of awards rendered abroad.

Supreme Court Decides on Enforceability of Awards against Consumers
  • Austria
  • 26 November 2009

The Austrian Supreme Court recently addressed for the first time some of the uncertainties surrounding the relevance of Section 617 of the Code of Civil Procedure in enforcement proceedings. Section 617 of the code was introduced by the Arbitration Act in 2006 and contains several provisions intended to protect consumers from becoming involved in arbitral proceedings.

Supreme Court Takes Stance on Form Requirements for Arbitral Award Enforcements
  • Austria
  • 16 April 2009

A US and a Cypriot party applied for the recognition and enforcement in Austria of an arbitral award made in the United Kingdom in proceedings conducted under the London Court of International Arbitration Rules. The Supreme Court had to deal with the question of whether all the formal requirements for the enforcement of the award had been fulfilled.


Asset Finance

Limitation Period for Recovering Warranty Guarantee Sums
  • Austria
  • 21 June 2000

A new Supreme Court ruling has ended the controversial discussion on whether the limitation period for recovery of a warranty guarantee sum is three years or 30 years. It provides that the 30-year period shall apply.

Bone Fide Acquisition of Title
  • Austria
  • 21 June 2000

The Supreme Court has ruled that once full ownership rights have been acquired in good faith, the innocent purchaser may transfer these ownership rights to any other person. The latter will acquire full unencumbered title, even if it knows that the original title was defective.

Claims of Beneficiary in the Bankrupcty of Trustee
  • Austria
  • 09 September 1999

Unlimited Mortgages
  • Austria
  • 09 September 1999

The Supreme Court now allows the registration of mortgages for a maximum amount to be used as security for all claims, not only those which are defined in the Land Register Act.

Stamping Out Tax Evasion
  • Austria
  • 09 September 1999

A recent amendment to the Stamp Duties Act will eliminate the possibility of avoiding stamp duty by executing a contract outside Austria which concerns Austrian assets.


Banking

Demand guarantees versus sureties on first demand
  • Austria
  • 02 March 2018

The Supreme Court recently clarified its position on sureties payable on first demand and confirmed its view on the interpretation of contractual undertakings by which one party assumes a personal liability for a third-party debt. Considering the significant different legal consequences for a beneficiary's position following a qualification as either an abstract guarantee or an accessory surety, the guidelines provided by the court are of the utmost importance.

Limits set to client communication via e-banking
  • Austria
  • 15 December 2017

The Supreme Court recently rendered its first judgment on the admissibility of the use of electronic mailboxes, which are exclusively incorporated and only accessible via the e-banking system of a credit institution for serving client account notices and statements to consumers. This ruling will significantly affect Austrian banking practice.

Implementation of Fourth Anti-money Laundering Directive in Austria – what to expect
  • Austria
  • 27 October 2017

Following the Fourth Anti-money Laundering (AML) Directive coming into force, Austria transposed the directive into law through two major legislative acts. This update provides an overview of the effects and obligations arising from the implementation of the Fourth AML Directive – in particular, the due diligence that banks will have to undertake on prospective clients.

Supreme Court rules on negative interest rates
  • Austria
  • 23 June 2017

Following a period of legal uncertainty and controversy, the Supreme Court has provided answers to the question of whether, against the backdrop of negative reference interest rates, a bank can unilaterally floor an overall floating interest rate at 0.00001%. Although the Supreme Court's decision is disappointing, it held that a decision rendered on an individual basis may come to other conclusions. Thus, this decision is unlikely to be the final word on this issue.

Debt recovery made faster, cheaper and more efficient? EAPOs and their implementation in Austria
  • Austria
  • 24 February 2017

New almost EU-wide rules recently entered into force to support businesses in the recovery of debt from debtors in other EU countries. The regulation established a new procedure for creditors by providing common rules regarding jurisdiction and the procedure and conditions for freezing funds held by debtors in bank accounts located in the European Union. Austria has amended its Enforcement Code in order to provide the necessary framework for the procedures set out in the EU regulation.


Capital Markets

Authority takes on financial supervision under new Control of Accounting Act
  • Austria
  • 28 January 2014

The Control of Accounting Act recently entered into force. Its purpose is to ensure that financial reporting published by entities whose equity or debt securities are admitted to trading on a regulated market in Austria is compliant with national and international accounting standards. To this end, the act vests the Financial Market Authority with the power to audit such financial information.

Authority tightens insider rules in new compliance regulation
  • Austria
  • 06 March 2012

In light of its findings during on-site audits of issuers' compliance organisations, the Austrian Financial Market Authority has amended the 2007 Compliance Regulation for Issuers and published a circular providing practical guidelines for issuers on the implementation of efficient compliance organisations.

Bondholders' rights in case of insolvency restricted by 1874 law
  • Austria
  • 08 February 2011

When insolvency proceedings were opened against A-TEC Industries AG, claims were made for around €300 million of bond debt issued by the company. The insolvency court appointed three trustees to represent the bondholders and their collective interests against the company. This restraint of bondholders' rights caused uproar among the mainly international institutional investor base.

Mergers and demergers: documents equivalent to prospectus
  • Austria
  • 23 November 2010

In the event of a public offer of securities, in order for the securities to be offered legally to investors, a prospectus must be prepared, approved by the competent authority and published. However, pursuant to Article 4 of the EU Prospectus Directive, the obligation to publish a prospectus does not apply if securities are offered, allotted or to be allotted in connection with a merger, provided that equivalent documents are available.

Profit participation certificates in light of new Supreme Court ruling
  • Austria
  • 07 September 2010

Only a few months after the Supreme Court issued a landmark ruling concerning the invalidity of prevalent and customary clauses included in terms and conditions of Austrian law-governed bond issues regarding consumer bondholders, a new Supreme Court ruling has extended some of the court's legal views to the terms and conditions of profit participation certificates.


Corporate & Commercial

Managers under trade law: how will Constitutional Court rule?
Schoenherr
  • Austria
  • 15 January 2018

The Higher Administrative Court recently requested that the Constitutional Court repeal Section 39(2) of the Trade Act, as it infringes fundamental rights guaranteed by the Constitution. Austrian legal practitioners are already eagerly awaiting this judgment, which is expected to be issued during 2018.

Beneficial Ownership Register to be introduced in Austria
Schoenherr
  • Austria
  • 04 September 2017

Parliament recently passed a new law on the registration of beneficial owners of Austrian legal entities. After obtaining the necessary approval of the Austrian federal states, the law is expected to enter into force on January 15 2018. In disclosing the relevant information on beneficial owners, the register aims to detect and prevent money laundering, especially with regard to complex corporate structures, holding companies or private foundations and trusts.

Participation rights as alternative investment and equity financing instruments
Schoenherr
  • Austria
  • 05 June 2017

The typical way to invest in an Austrian company is by way of a capital increase. However, there are formalities with respect to limited liability companies (LLCs) – the most popular legal form in Austria – that sometimes make investing in LLCs unattractive or burdensome. To eliminate the concerns associated with these transactions, Austrian law provides a suitable, but widely unknown, alternative investment instrument: participation rights.

Simplified procedure for foundation of standard LLCs
Schoenherr
  • Austria
  • 29 May 2017

The Austrian Parliament recently passed an amendment to the law on limited liability companies (LLCs) aimed at simplifying the foundation of a special kind of LLC. The purpose of the changes – and the simplifications associated with them – have been hotly debated.

Further clarification on apparent authority
Schoenherr
  • Austria
  • 20 March 2017

In a recent decision the Supreme Court held, in line with prior case law, that apparent authority requires the circumstances on which the assumption of authority is based to be induced by the principal, not by the representative. Although this is not new, the verdict has helped to clarify the boundaries of apparent authority. Certain key requirements must be met in order to establish apparent authority and thus allow the counterparty to rely on it.